Decentralized finance (DeFi) continues to be a lucrative target for cybercriminals, despite a reported decline in the total value of funds stolen in 2023. This is according to a new report by blockchain security firm Halborn.
The report, which analyzed the top 100 DeFi hacks between 2016 and 2023, revealed that the industry has lost a staggering $7.4 billion to malicious actors. Ethereum, Binance Smart Chain, and Polygon emerged as the most targeted platforms.
While on-chain attacks, such as smart contract exploits and governance attacks, remain prevalent, off-chain incidents like private key theft have proven to be even more lucrative for hackers. In fact, these attacks accounted for a larger share of both the total number of attacks and the stolen funds in 2023.
Halborn emphasizes the importance of multi-sig wallets, which require multiple signatures to authorize a transaction, as a crucial security measure. Surprisingly, only 21% of hacked protocols employed this safeguard.
The report also highlights the critical role of smart contract audits. A significant portion of on-chain attacks targeted protocols that had not undergone rigorous security assessments. Faulty input verification and validation were identified as common vulnerabilities exploited by hackers.
Cross-chain bridges, which facilitate asset transfers between different blockchains, have also proven to be a tempting target for cybercriminals. The recent $12 million hack of the Ronin Bridge serves as a stark reminder of the risks associated with these platforms.
The DeFi industry faces a complex challenge in combating these threats. While the overall value of stolen funds may have decreased in 2023, the frequency and sophistication of attacks continue to rise. As the sector matures, robust security measures and a vigilant approach to risk management will be essential to protect user funds and maintain investor confidence.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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